Polished diamond prices have risen by three to four per cent in the past two weeks, on higher demand from domestic and international jewellery manufacturers.

Polished diamonds of VVS quality were sold at Rs 3,220 a cent (a cent is a hundredth of a carat) on Wednesday for spot delivery in the benchmark Surat market. The recent bottom was Rs 3,177 a cent.

The price rise during the ongoing lean season is unusual. Global consumers normally, stay away from fresh purchases for a month or two after the 45-day peak demand period of Christmas and New Year. Economic growth in America and a jump in equity indices has raised the purchasing power of individuals.

"Along with individual stones, demand for diamond studded jewellery has also risen sharply over the past few weeks," said Mehul Choksi, managing director, Gitanjali Gems, one of India's largest producers of branded jewellery.

Data from the US department of commerce showed sale of precious ornaments, including jewellery and watches, jumped by 8.4 per cent in November, the sharpest rise in 12 months.

The rise in November 2016 was 7.6 per cent. Experts expect sales growth to have gone further in US jewellery sales during December and this month.

America consumes a little over 40 per cent of gold and diamond jewellery produced globally.

Indian diamond processors and jewellery manufacturers have intensified import of both rough and polished diamonds to meet the demand. The boost could partly be attributed to the cut in goods and services tax (GST) rates to 0.25 per cent across all segments of the diamond value chain, from the earlier three per cent on polished diamonds.

However, the industry says it continues to face working capital blockage due to delay in release of GST refunds. "This delay is going to have a cascading effect on diamond processing. Small and medium size units will be badly hit," said Sabyasachi Ray, executive director of the Gems and Jewellery Export Promotion Council.

Data from the Council shows India's import of rough diamonds jumped to 207.61 carat (worth Rs 139.8 billion) last month, from 108.45 carat in the same month last year. Import of polished diamonds was Rs 14.1 bn for December, from Rs 13.95 bn in the same month last year.